My Foreign Bank Wants me To Sign A FATCA Certification
Any experienced International Tax Lawyer will tell you that a notice from your Foreign Bank or Financial Institutions regarding FATCA (Foreign Account Tax Compliance Acts) means serious business.
Once you receive a FATCA (Foreign Account Tax Compliance Act) Notice or Certification from your Foreign Bank and/or Foreign Financial Institution, the clock has begun to run and chances are your information will be reported to the U.S. Government.
If you are a U.S. Citizen, Legal Permanent Resident, or Foreign National subject to U.S. Tax such as qualifying to pay U.S. tax under the Substantial Presence Test and you received a FATCA inquiry or notice, it is important you act quickly.
Over the last three to four years, FATCA has really picked up steam. More than 110 foreign countries have entered into FATCA Agreements, and more then 300,000 Foreign Financial Institutions (FFI) have agreed to report U.S. Account Holder information to the US government.
Moreover, last years attempt to repeal FATCA was denied — and in late 2018 the US government chalked up its first criminal conviction using FATCA.
Many FFIs are Reporting
Many Clients first contact us after receiving an initial FATCA inquiry from one of their Foreign Financial Institutions (or multiple inquiries from multiple institutions).
Sometimes, the notice or inquiry will also make reference to CRS, which is the Common Reporting Standard, which is the the non-US version of FATCA.
In fact, some countries are reporting under both FATCA, and CRS by way of AEOI (Automatic Exchange ofInformation)
FATCA Warnings Have Gotten Tougher
In the last year or two, we have noticed a shift in how the FATCA Inquiry are being written.
FATCA Notice Examples
FATCA Emails and Inquiries
First, Foreign Financial Institutions are not just sending correspondence, they are sending emails and they are sending them in mass (so be sure to check your junk or spam box).
Less Ambiguity in FATCA Notice Content
Second, the lnotices are less ambiguous than they were back in 2014 or 2015. The updated notice will ask the individual account holder to actively respond to information — and even sign documents under penalty of perjury. This is to ensure that there is no confusion as to who is a U.S. Person vs. U.S. Citizen.
Stricter FATCA Deadlines
Third, many of these new FATCA notices have very strict response deadlines. In years past, it was relatively simple for the client to contact the bank or other Foreign Financial Institution and simply ask for an extension. These days, oftentimes the bank may not even respond to the request.
Additional Support Documents
Fourth, some of these Foreign Financial Institutions are asking for more than just the FATCA notice signed and returned to them. The institutions are also seeking copies of additional documents and/or affirmations (under penalty of perjury) that the individual account holder has both filed the necessary tax returns with the IRS, and filed on necessary FBAR and other informational returns.
Bank Accounts Frozen, Forfeited and Reported
Fifth, if you do not respond to the noticer, many institutions will simply close your account and freeze your money – and they will not provide you any access to the money until you can prove compliance. In addition, if you do not respond these institutions they will report you to the IRS anyway.
Has Your FFI Already Reported You?
Another tactic that many of these institutions are following is that they are not telling the account holder that they have reported the information to the US government. Therefore, since the US government may already have your information, it can severely limit your ability you file for IRS amnesty.
Even if you are not under civil audit or a criminal investigation, if the IRS already has your information – even if they haven’t acted on it –they can still reject you from the amnesty program.
Therefore, if you believe your bank may have reported you, or is about to report you to the US government — you should consider getting into compliance sooner as opposed to later.
Golding & Golding, A PLC
We have successfully represented clients in more than 1,000 streamlined and voluntary disclosure submissions nationwide and in over 70-different countries.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.